The electricity market is being increasingly challenged by new trends, such as the high penetration of intermittent renewables and the transformation of the consumers’ energy space. To accommodate ...these new trends and improve the performance of the market, several modifications to current market designs have been proposed in the literature. Given the vast variety of these proposals, and focusing on the short-term timescale within the context of European electricity markets, this paper provides a comprehensive investigation of the modifications proposed in the literature as well as a detailed assessment of their suitability for improving market performance under the continuously evolving electricity landscape. To this end, first, the barriers present in current market designs hindering the fulfilment of an efficient performance are identified. Then, the different market solutions proposed in the literature, which could potentially mitigate these barriers, are extensively explored. Finally, a taxonomy of the proposed solutions is presented, highlighting the barriers addressed by each proposal and the associated implementation challenges. The outcomes of this analysis show that even though each barrier is addressed by at least one proposed solution, no single proposal is able to address all the barriers simultaneously. In this regard, a future-proof market design must combine different elements of proposed solutions to comprehensively mitigate market barriers and overcome the identified implementation challenges. Thus, by thoroughly reviewing this rich body of literature, this paper introduces key contributions enabling the advancement of the state-of-the-art towards increasingly efficient electricity markets.
•Proposals to modify the current electricity market design are vastly numerous.•Most design modifications for the short-term focus on new players’ constraints.•Significant attention is also given to how electricity prices should be defined.•Potential advantages of design changes to the market performance are substantial.•Implementation challenges of the new market design solutions need to be addressed.
The European electricity market model continues to evolve in the face of new challenges. This systematic literature review aims to assess the status of research and discussion on the current model ...and its market mechanisms. In addition, it aims to ascertain the kinds of modelling tools that have been used to model market mechanisms or formulate proposals for changes to current practice. The results show that the challenges of individual market mechanisms have been identified quite extensively in the research sample. However, the number of papers identified for inclusion in the systematic literature review was quite small, from which it can be concluded that there are surprisingly few publications focusing on this particular topic. Nevertheless, the trend indicates a probable increase in research in the subject area in the future. The general standpoint among researchers seems to be that the goals set by the EU are, as it were, a law of nature that cannot be deviated from. Consequently, new radical change proposals or comprehensive reforms were not encountered in the study. In addition, it was found that optimization was the most commonly used modelling method in the papers included in the literature review.
•Optimal power flow and trading are combined in a single optimization problem.•A real dataset from a prosumer community in Amsterdam is used.•The role of a smart contract as a virtual aggregator is ...described in a detailed manner.•Import cost reductions of up to 34.9% are found for the combined model.•The combined model shows 50% reduced peak energy imports.
In this paper, an integrated blockchain-based energy management platform is proposed that optimizes energy flows in a microgrid whilst implementing a bilateral trading mechanism. Physical constraints in the microgrid are respected by formulating an Optimal Power Flow (OPF) problem, which is combined with a bilateral trading mechanism in a single optimization problem. The Alternating Direction Method of Multipliers (ADMM) is used to decompose the problem to enable distributed optimization and a smart contract is used as a virtual aggregator. This eliminates the need for a third-party coordinating entity. The smart contract fulfills several functions, including distribution of data to all participants and executing part of the ADMM algorithm. The model is run using actual data from a prosumer community in Amsterdam and several scenarios of the model are tested to evaluate the impact of combining physical constraints and trading on social welfare of the community and scheduling of energy flows. The scenario variants are trade-only, where only a trading mechanism is implemented, grid-only where only OPF optimization is implemented and a combined scenario where both are implemented. Results are compared with a baseline scenario. Simulation results show that import costs of the whole community are reduced by 34.9% as compared to a baseline scenario, and total energy import quantities are reduced by 15%. Total social welfare is found to be highest without a trading mechanism, however this platform is only viable when all costs are equally shared between all households. Furthermore, peak imports are reduced by over 50% in scenarios including grid constraints.
This paper explores the impacts of the stay-at-home advisory issued in response to the COVID-19 pandemic on regional electricity generation fuel mixes for the three major RTOs: NYISO, MISO, and PJM. ...We find that the COVID-19 pandemic affected these regional markets differently, although one common finding is that overall electricity generation declined after the stay-at-home advisories were issued. We also empirically tested the impact of the stay-at-home advisories on electricity generation for different fuel types.
Wind and solar power generation have been rapidly increasing on a global scale; this increase is limited by the capacities of the existing grids at maintaining balance between supply and demand to ...accommodate the fluctuations of these renewable energy resources. Therefore, grid flexibility has become a key factor in power systems. This study focuses on demand response business models (DRBMs), which have great potential for fostering energy flexibility in a cost-efficient and sustainable manner. Based on the literature review and empirical data from a case study, a business model analytical framework is proposed to explore the demand response potential based on value proposition, value creation and delivery, and value capture. This DRBM framework is characterised by nine elements: flexibility product, flexibility market segment, service attributes, demand response resources, resource availability, demand response mechanism, communication channels, cost structures, and revenue model. Based on this framework, a visualisation tool is proposed to help researchers and practitioners understand, integrate, and develop flexible electricity products. The application of this tool is then presented for electric vehicles as an example. The tool is valuable for evaluating the initial and untapped potentials of commercial demand response in electricity markets. This study thus contributes to the body of demand response literature via development of a holistic approach to assist recognition and creation of business models in emerging electricity markets.
•Demand response and business model approaches are integrated.•Business models for energy flexibility products remain relatively uncomprehended.•A practical tool for demand response business model is presented.•Nine business model elements introduced to address demand response complexity.•Future directions in the demand response business field include developing new socio-technical configurations.
Typically, solar power is offered for price bids at the level of their near zero marginal costs to electricity markets. While aggregate effects of this behaviour on prices (merit-order effect) and ...profits (cannibalisation effect) have been studied extensively, potential deviations from this strategy still lack an understanding. We observe a group of firms to offer solar power for prices larger than zero to the Iberian electricity day-ahead market. Based on a literature review and analysing incentives set for solar power by the Spanish electricity market design, we suggest these price bids to result from revenue opportunities in sequential markets. Results of our regression analyses confirm that the observed group of firms is more likely to conduct arbitrage. This motive also allows for explaining the level of a case-study firm’s price bids.
•Contrary to common belief, several Spanish solar generators bid day-ahead prices above zero•Owners of these units more likely to conduct arbitrage in sequential markets•Level of price bid can be explained by expected intraday market price
Solar forecasting is a rapidly evolving field that can substantially contribute to the effective integration of large amounts of solar photovoltaic (PV) capacity into the electricity system. However, ...newly developed solar forecasting models are rarely tested in an operational context considering the intended application and objective. Besides, models are typically evaluated considering only technical error metrics, disregarding their economic value. This paper proposes an operational bidding strategy that optimizes the participation of a PV power plant in the electricity spot markets. To this end, a novel multistage stochastic optimization method is developed that considers the day-ahead, intraday, and imbalance markets. As the developed method utilizes a scenario generation algorithm, the proposed method can be adopted for a wide variety of related applications. The performance of the developed method is assessed using technical and economic metrics and compared to a reference method. The results demonstrate the effectiveness of the proposed bidding strategy, as it substantially outperforms the reference market bidding strategy. The findings also provide insights into the value of a multistage bidding method, as extending market participation from the day-ahead to the intraday market increases revenues by 22%, while halving the total imbalance. Additionally, the study examines the relationship between the technical and economic performance of solar power forecasting models, revealing a non-linear correlation.
•We develop an operational bidding strategy for PV plant operators participating in electricity spot markets.•The strategy concerns a multistage scenario-based stochastic method.•Time-independent probabilistic solar power forecasts are transformed into interdependent scenarios.•The results are thoroughly evaluated, considering technical and economic metrics.•The application of the method leads to increased revenues and reduced imbalances.
New concepts of local electricity markets (LEMs) have led increased focus on the decentralization of energy systems and a raise in local energy communities (LECs). Under the right market-regulatory ...incentives, peer-to-peer (P2P) electricity trading schemes facilitate direct trade among the prosumers and enable active consumers of energy to share the self-generated electricity and make effective use of flexibility services provided by distributed energy resources (DERs). The paper presents a review of the state of implementation of LEMs and P2P. The research questions are: What grid tariff designs affect the value of peer-to-peer? How does a local energy market benefit from grid tariff designs? To address these questions, the authors survey the latest regulatory frameworks in Europe, focusing especially on Austria, Ireland, and Norway.
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•Local electricity markets applying peer-to-peer can promote decentral generation.•Distribution system operator cooperation is mandatory for peer-to-peer trading.•Regulatory peer-to-peer trading frameworks differ in European countries.•Innovative grid tariffs are introduced.•Innovative grid tariff design can promote peer-to-peer trading.
In recent years, the integration of distributed generation in power systems has been accompanied by new facility operations strategies. Thus, it has become increasingly important to enhance ...management capabilities regarding the aggregation of distributed electricity production and demand through different types of virtual power plants (VPPs). It is also important to exploit their ability to participate in electricity markets to maximize operating profits.
This review article focuses on the classification and in-depth analysis of recent studies that propose VPP models including interactions with different types of energy markets. This classification is formulated according to the most important aspects to be considered for these VPPs. These include the formulation of the model, techniques for solving mathematical problems, participation in different types of markets, and the applicability of the proposed models to real case studies. From the analysis of the studies, it is concluded that the most recent models tend to be more complete and realistic in addition to featuring greater diversity in the types of electricity markets in which VPPs participate. The aim of this review is to identify the most profitable VPP scheme to be applied in each regulatory environment. It also highlights the challenges remaining in this field of study.
•The application of VPP models to different electricity markets is analyzed.•The advantages and limitations of the optimization methods for VPP models are studied.•A discussion on VPP models in recent years is presented.•Combining multiple electricity purchasing and sales strategies is a future challenge.
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